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"Share" in the Capital of the Company

30 September, 2015

Hong Kong Companies Ordinance defines a share as the interest of the shareholder in a company expressed in monetary terms. It's basically a percentage of the capital of the company. The ownership of the share carries obligations as well as rights. Shares di bit gave nominal value

Law: sec 135, Hong Kong Companies Ordinance

Classes of shares
There may be several types of shares. It varies in rights attached to each type of share (for example voting rights)

  • Ordinary/Equity Shares – give shareholders control over the company
  • Preference Shares – give preferential rights to shareholders to
    • A fixed and cumulative dividend
    • A return of capital
  • No preference Shares – the company also may issue no preference shares
    • Cumulative Preference Shares – cumulative preference shares give the holder a dividend at a fixed rate throughout the life of the company
    • Non-cumulative Preference Shares – if the non-cumulative preference shares are issued, dividends need only be paid in the years when the company has profits and is able to pay the dividends at the fixed rate
    • Redeemable Preference Share – give shareholders the right to either be repaid their capital or the company the right to repay the capital
    • Convertible Preference Share – may be converted to any other class of share
  • Employee's Shares – issued as an incentive to employees
  • Management Shares – issued in limited numbers to founders. Management shares usually have big voting rights

Shareholder vs. Member

There two terms often used interchangeably, however they may not have the same meaning.
A member isn't necessarily a shareholder (the company has no share capital) or vice versa a shareholder isn't necessarily a member.

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